Monday, September 16, 2013

A post not about Venezuela

I really, really do not want to write about our mess. Fortunately putting up this great cartoon from the Economist will allow us to see the importance of next week end German elections. Even for Venezuela which could use well a dose of Merkelmedicine. And will require one anyway, anytime soon.

I am going to vote for the opposition, Nevertheless, I hope the once who like the picture, might invest the time to read the associated article of the Economist about German elections next weekend and our Chancellor Merkel. http://www.economist.com/news/briefing/21586299-perceptions-germanys-chancellor-who-likely-win-re-election-september-22nd-are

Some points: - Germanys history of the last 125 years is marked by very problematic unilateralist leaning. In the current crisis of Europe we are often portrayed as being in a lonely position. Nevertheless Flandres, the Netherlands, all Scandinavia, Baltic states, Poland, Czech Republic, Slovakia, Austria and Slovenia think very similar as we do. - in relation to our standard of living we have very little materia prima. As many other regions and countries like Eastern Asia, South Asia, the US, Mexico, etc. we have to earn our living by processing materia prima. As we all know, there is much more and rising competition in this business on this planet. - The share of France in worlds' exports of finished goods has declined dramatically over the last 40 years. Germany somehow manages to have quite a balanced trading relationship with China. Merkel often expresses her horror of an Europe that lives from tourists who come here to watch the historic buildings and the pintoresk savoir vivre. An Europe that has lost connection to competition in industrial markets. I share this preocupation and consider it healthy. - Germany is not to blame, that italians have thought they could vote over decades a guy like Berlusconi without damaging their future, Greeks confusing the cohesion funds of the European Union as an eternal stream of money for keynesian style employment programs for building bridges and roads where there is simply no demand, Spanish having an imperturbable faith in the eternal rise of housing prices and the french conviction that working 32 hours a week is just right.- there could be more serious analyisis in Southern Europe about the points that make us competitive, like for example really easy access of SMB for a qualified workforce, finance and cooperation with Universities, a good offer of education for a broad spectrum of different demand especially for the more practically inclined. - Northern Europe, probably with France included, do much better than Southern Europe in closing holes of tax evasion for people who make good money. Globalization and any time more sofisticated use of technology in production makes this a necesity to keep equality of opportunities on acceptable levels. There were healthy pressure from länder governed by Socialdemocrats on the central Government in this issue. - the very good news that there are now huge solar energy projects in Atacama desert (5 Gigawatt) is in not small part due to our groundwork in regenerative energy.

- and last but not least our second try to national unification was perceived here as a long lasting exhausting process. It was hard and very costly to integrate a run down country like German Democratic Republic in 1989. Run down, except for the many, many hard working, good educated and smart Eastern Germans who found their way in a very much changed environment, of course. South Koreans who took a deeper look into our "glorious reunification" became much more reluctant towards the idea to reunify their Koreas. Between 1990 and 2010 we had much lower growth rates than western and southern Europe. Now we are at a public debt of 80% GDP. There is a long lasting debate since the 80ties to start to reverse the trend of an everlasting growth of public debt in this country. In 2008 we seemed to get to the point. Then US housing bubble burst. Then bubbles in the South of Europe burst. A lot of people here ya se aburrieron to solve the self inflicted problems of other developed societies, "because the alemanitos are so nicely disciplined and organized workers".

Problematic issues are- Our industry is in constant need of well educated, young and ambitious young people. I currently work in Wolfsburg, which is more Volkswagen headquarter than a city. I hear a lot of spanish in the street and in supermarket. In the last 3 years I worked with 2 greeks with very over average capabilities, who came here because of the crisis. There is a brain drain going on in Europe. This makes german industry even more stronger and this will set Southern Europe back. We should really at least try some industrial reconstruction policy for the south. - There are some sectors in our economy that pay very small wages. They tend to have many employees from Romania and Bulgaria. Slaughterhouses from all Western Europe are relocating to Germany, because of <5 Euro per hour wages for 60 hour working weeks. Traditionally we had strong trade unions and high welfare aid for those who don't work, but now we really need a minimum wage of at least 8,50 Euro. - We got used to those high trade surpluses. In the 00s, when we weren't that competitive in the new markets of Eastern Asia we run surpluses with the south of Europe while keeping wages constant. Now as there is enough demand from Eastern Asia, we don't care that much about the fate of Southern Europe. I think, that this is a valid perspective.

I share a lot of your concerns. There are still some things that bother me here.

* 15% of Germany's income from exporting weapons come from Greece.* What is it about German banks' interests in speculation in Spain, Greece, etc? (admittedly, with the complicity of local politicos)

Don't get me wrong, I have seen the crazyness of things like ghost airports in Spain and the like, completely self-inflicted, the level of corruption there and in Italy, the countless redundant administrative, political structures in the South...but issues like the ones I mentioned firstly need to be addressed as well.

I am not sure, what you mean with banks interests. Some might have bought bonds, when they were even cheaper than now. Like NML in the case against Argentina. They might get some deals, but in the end the Euro tax payer (like you and me) will pay much more. Why did they ordered so much weapons in the first place? Clearly, for exports we do nearly anything. We also sell lots of arms to Africa, which is even worse. Until now it has been pure short term crisis management, intentioned mainly to shield us from the crisis. I tried to explain, why this is popular in Germany. All mayor finance crisis first had quite a long time of short term crisis management. Like Latin American debt crisis before Brady Bonds. Merkel is certainly not is the right person to lead a visionary long term development plan. Opposition has no plan neither. Maybe it is to early. What I probably did not make clear enough above is the point, that we enjoyed calladito their extra demand from their bubbles thanks to their bad management with the hard currency at a time we had very sluggish growth and now after the bubbles burst we kind of act like its more their business. We should really think how we might help. Again: I won't vote Merkel. And Germany certainly its fair share of "international" regional ghost airports like Dortmund, Kassel (!), Rostock, Magdeburg (!) and some more. All cities less than 1,5 hours away from a serious international airport.

Half Empty, it must be the Germans rescuing the Greeks and other debtor countries.The stones might be the ruins of Greek temples, or maybe the ones on the left could be the crumbles of Stonehenge.Here in the pic only Germany passes the mustard which I sense is the most important point.

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